May 31 - Tesco, the world's third-biggest retailer, is simplifying its executive pay scheme and cutting the base salary of its chief executive as it seeks to end rows with shareholders over how it pays its leaders.

Tesco store in London

The British group, which saw 47 percent of shareholders either vote against or abstain in a vote over executive pay last July, said on Tuesday it expected the new pay scheme would deliver broadly the same level of rewards as before.

However, it said the scheme was simpler and, particularly in the case of the chief executive's package, more focused on performance-related elements than fixed payments.

New boss Phil Clarke will receive a base salary of 1.1 million pounds ($1.8 million), down from the 1.4 million received by his predecessor Terry Leahy, who retired in March.

"We have designed a new structure which is simpler and more collegiate, with clear strategic financial targets, delivering broadly the same levels of remuneration as before but in a better way and more aligned with the interests of our shareholders," chairman David Reid said.

Under the new scheme, four long-term incentive plans with five separate measures will be replaced by a single plan with two performance measures -- return on capital employed and earnings per share.

The number of performance measures for the annual bonus will also be cut from over 20 to seven, while all executives -- including the CEO -- will participate in the same plan.

Executive share options will be replaced by performance share awards, expected to be of a comparable value.

Tesco published the new plan alongside its annual report which showed Leahy left the business with a total of 12 million pounds from pay, awards and cashing in share options. His pay package fell to 4.2 million in the year to February from 5.2 million the year before, due in part to fewer share awards.

But he cashed in 5.2 million pounds of share options, some of which he had held for around 10 years, and received a further 2.6 million from long-term and executive incentive schemes.

Clarke, who was head of Tesco's Asian and European businesses during the group's last financial year, saw his pay package fall to 2.3 million pounds from 2.7 million, also due to fewer share awards.

He could make a maximum equivalent of about 7 million pounds this financial year if he meets all the performance objectives set for him, though much of that would be paid in shares which he would not be able to cash in for several years.

Opposition to last year's executive pay plan was focused on a big bonus paid to Tim Mason, the head of Tesco's loss-making U.S. business. Corporate governance advisory firm Pirc also described the bonus and long-term incentive plans for all executives as excessive.

(Reporting by Mark Potter; Editing by Louise Heavens)